Eight State Attorneys General Call for Biden to Cancel Federal Student Loan Debt​​​

Attorneys general from New York, Hawaii, Illinois, Michigan, Minnesota, New Mexico, Puerto Rico and Washington sent a letter on Monday to President Joe Biden urging him to cancel federal student debt "for each and every borrower," Business Insider reported yesterday. They wrote that, in their roles, they have seen the burden student debt can have for borrowers who fall behind on payments. This includes wage garnishment and seizure of federal benefits, which Biden can ensure permanent relief for by forgiving that debt. "Restarting federal student loan payments, rather than permanently forgiving them, will only make matters worse," they wrote. "While pushing out repayment restarts and attempting to tackle past forbearance abuses are helpful, they are not enough.” State attorneys general have previously fought for protections for student loan borrowers. In January, 39 of them reached a $1.85 billion settlement with major student loan company Navient over accusations the company misled borrowers and steered them into deeper debt, which Navient denied. And now, with Biden saying he will make a decision on student loan relief in the coming weeks — before student loan payments are set to resume after August 31 — they are joining Democrats in Congress pushing for broad relief for every federal borrower. Click here to read the letter.

In a related story, President Biden would be on shaky legal ground if he were to pursue broad-based student debt cancellation by executive action, President Barack Obama’s former top Education Department lawyer wrote in a legal analysis, the Wall Street Journal reported. Using executive action to cancel debts for student borrowers without tying relief to their individual needs and using regulatory procedures would put the Biden administration at risk of having its plan overruled in court, according to a legal analysis prepared by Charlie Rose, who served as the top lawyer in the Education Department under President Obama from 2009 to 2011. “If the issue is litigated, the more persuasive analyses tend to support the conclusion that the Executive Branch likely does not have the unilateral authority to engage in mass student debt cancellation,” Mr. Rose wrote in a memo for his law firm, Hogan Marren Babbo & Rose, Ltd. He suggested that loan-servicing companies and investors that own securities backed by student loans might be in a position to sue the administration over broad-based debt cancellation. Read more. (Subscription required.)

When Student Loan Debt Paused, These Borrowers Kept Paying​​​

Rather than skipping payments during the Biden administration’s student-loan freeze, a small but committed percentage of borrowers chose to keep paying anyway, the Wall Street Journal reported. As of December 2021, 1.2% of borrowers continued paying down loans, said Mark Kantrowitz, a student loan expert. Mr. Kantrowitz’s estimate is based on repayment data released by the Education Department. The student loan pause was a pandemic-relief measure that began in March 2020, and which President Biden recently extended through the end of August. The Federal Reserve Bank of New York estimates that borrowers skipped nearly $200 billion in payments during this period. The two-plus years of optional, interest-free payments allowed these borrowers to put a dent in their loans. Some managed to wipe out their debt entirely. Read more. (Subscription required.)

Survey: Americans See Spike in Borrowing from Friends, Family​​​

A new poll finds that more Americans are borrowing money from family and friends than they were a year ago, The Hill reported. According to the Census Bureau’s Household Pulse Survey, 25.6 million people, or more than 10 percent of U.S. adults, had to rely on their support network for financial backing, up from 19.1 million a year. Fourteen percent of respondents who identify as millennials said in the survey that they borrowed money from their family members and friends, a 3 percent increase from April 2021. Eleven percent of respondents who identify as Generation X said that they borrowed money from their family and friends in the survey, and 8 percent of respondents identifying as baby boomers said the same. The latest Census Bureau survey was conducted from March 30 to April 11, sending invitations to 1 million households and receiving a total of 63,769 responses. The survey had a weighted response rate of 6 percent. Read more.

Unemployment Claims Climbed to 200,000 Last Week​​​

New applications for unemployment benefits rose last week for the first time since early April amid other signs the U.S. labor market remains unusually tight, the Wall Street Journal reported. Initial jobless claims, a proxy for layoffs, increased by 19,000 to 200,000 last week from the previous week’s revised level of 181,000, the Labor Department said Thursday. Filings for unemployment benefits have remained near historic lows since late 2021. The four-week average for claims, which smooths out volatility in the weekly figures, rose to 188,000 from the previous week’s revised 180,000. The four-week average reached 170,500 last month, its lowest point on records dating back to 1967. Continuing claims, a proxy for the total number of people receiving payments from state unemployment programs, declined to 1.4 million for the week ended April 23 from the previous week’s level — the lowest level since January 1970. Continuing claims are reported with a one-week lag. Read more. (Subscription required.)

Small Businesses Still Struggle to Find Enough Workers, According to Survey​​​

Some small businesses are still struggling to hire qualified workers, even as Americans return to the U.S. job market in droves, the Associated Press reported. Hiring and retaining employees remains the top challenge for small businesses, according to a survey of 1,100 businesses by Goldman Sachs 10,000 Small Business Voices out last week. Ninety percent of businesses that are hiring are finding it difficult to recruit qualified candidates for open positions. In general, the U.S. job market is sizzling. An unexpectedly strong recovery from the brief but devastating coronavirus recession left companies scrambling to recall workers they had laid off in the spring of 2020 and to find new ones. Over the past year, U.S. employers have added an average of more than 540,000 jobs a month. The Labor Department is expected to report Friday that employers hired another 396,000 last month, according to FactSet. But small business owners believe the job market is a tale of two recoveries. Eighty-eight percent of respondents in the Goldman Sachs survey say small businesses are struggling relative to larger companies in their local communities. Forty-two percent say they have lost employees to larger businesses that are paying more. Read more.

COVID Coverage for All Dries Up Even as Hospital Costs Rise​​​

For the first time, the U.S. came close to providing health care for all during the coronavirus pandemic — but for just one condition, COVID-19. Now, things are reverting to the way they were as federal money for COVID care of the uninsured dries up, creating a potential barrier to timely access, the Associated Press reported. But the virus is not contained, even if it’s better controlled. And safety-net hospitals and clinics are seeing sharply higher costs for salaries and other basic operating expenses. They fear they won’t be prepared if there’s another surge and no backstop. “We haven’t turned anybody away yet,” said Dr. Mark Loafman, chair of family and community medicine at Cook County Health in Chicago. “But I think it’s just a matter of time.... People don’t get cancer treatment or blood pressure treatment every day in America because they can’t afford it.” A $20 billion government COVID program covered testing, treatment and vaccine costs for uninsured people. But that’s been shut down. Special Medicaid COVID coverage for the uninsured in more than a dozen states also likely faces its last months. Read more.

American Consumers Are Shopping, Traveling and Working Out Like It’s 2019​​​

Many Americans are resuming their pre-pandemic habits: rocking out at crowded concerts, doing deadlifts next to strangers at the gym and stocking a standard supply of toilet paper, the Wall Street Journal reported. Airlines, restaurants and child-care centers, which relied on government loans to stay afloat during COVID-19’s peak, can now hardly keep up with demand. Live Nation, which owns Ticketmaster, said concert ticket sales were up 45% as of February 2022 compared with the same period in 2019, the last full pre-pandemic year. As of February, the company had 30% more concerts planned for 2022 than 2019. Membership levels at gym chain Planet Fitness in January surpassed pre-pandemic levels following a stretch in which some 25% of the nation’s gyms closed, according to industry data. Over 2 million people traveled by plane each day on average between April 17 and 23, according to the Transportation Security Administration. That figure averaged about 2.4 million in 2019. At the same time, some pandemic stars like Peloton Interactive Inc., Netflix Inc. and Instacart Inc. have taken hits. From hoping that consumers had permanently shifted their behavior, the companies are now considering previously unthinkable changes. Netflix, hit with its first membership decline in a decade, is considering offering a lower-priced ad-supported version. Peloton, losing money and saddled with excess equipment, is lowering the price of its stationary bikes. Instacart slashed its valuation. Read more. (Subscription required.)

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Analysis: The Era of Cheap and Plenty May Be Ending​​​

For the past three decades, companies and consumers benefited from cross-border connections that kept a steady supply of electronics, clothes, toys and other goods so abundant it helped prices stay low. But as the pandemic and the war in Ukraine continue to weigh on trade and business ties, that period of plenty appears to be undergoing a partial reversal, the New York Times reported. Companies are rethinking where to source their products and stocking up on inventory, even if that means lower efficiency and higher costs. If it lasts, such a shift away from fine-tuned globalization could have important implications for inflation and the world’s economy. Economists are debating whether recent supply chain turmoil and geopolitical conflicts will result in a reversal or reconfiguration of global production, in which factories that were sent offshore move back to the U.S. and other countries that pose less of a political risk. If that happens, a decades-long decline in the prices of many goods could come to an end or even begin to go in the other direction, potentially boosting overall inflation. Since around 1995, durable goods like cars and equipment have tamped down inflation, and prices for nondurable goods like clothing and toys have often grown only slowly. Those trends began to change in late 2020 after the onset of the pandemic, as shipping costs soared and shortages collided with strong demand to push car, furniture and equipment prices higher. While few economists expect the past year’s breakneck price increases to continue, the question is whether the trend toward at least slightly pricier goods will last. Read more.

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